The Telephone Franchise Fight: A Speculator's Bid Rejected

The members of the city council are not prepared to admit that they are to blame for the failure of the new Standard Telephone Company to secure a franchise in this city, or for the consequent absence of Seattle from the list of cities where the company proposes to operate. The members of the board of aldermen who voted the ordinance down claim that it met this fate because S. H. Piles, who applied for the franchise, was unwilling to make known who were his principals or to give any security that the company would actually construct a telephone plant within a reasonable time. As evidence that they were ready to grant a franchise to a bona fide competing company, these aldermen quote the fact that one was granted to the Home Telephone Company, represented by A. M. Brookes.

The Piles franchise was referred to a special committee, of which Mr. Lovejoy was chairman, and was defeated by the adverse votes of Messrs. Lovejoy, Sweeney, Clise and Compton. Concerning the reasons for his vote, Mr. Lovejoy said yesterday:

'S. H. Piles presented a petition for a telephone franchise in March a year ago. He wanted the franchise without any conditions. He would not tell us who was backing the scheme, and would not consent to allow the city any per cent of the net earnings, and, in fact, would give no information or make any overtures regarding what he would do or expected to do. He specified no period of time when he would have his plant in operation. Altogether, Mr. Piles' actions and demeanor made his petition open to serious criticism. It appeared to us like a money-making speculation on his part. I believed then and believe now that he intended to secure the franchise for purely speculative purposes, and hold it for sale. As chairman of the special committee I wrote out our report on the matter, and in it specified that Mr. Piles and his colleagues should put up a cash bond or a guarantee that at least some portion of the plant should be in operation within six months, and if no phones were in operation at that time the bond should be forfeited to the city. The bond asked was not $1,000, as Mr. Piles is reported as saying.

'Before I filed the report with the council I saw Mr. Piles, and told him that if he could give us any proof of his sincerity in the matter and could in any way show us that he was backed by men who meant business, I, for one, would recommend that the bond be lessened and the time extended from six months to nine months. But he would listen to nothing and would agree to nothing. He said he would not put up a cent, would not produce a bond, and would not specify when his company would commence work. Under the circumstances what could we do? We did not grant the franchise.

'Shortly thereafter A. M. Brookes and others petitioned for a franchise for a new telephone plant, stating that phones in dwelling houses would cost but $2 per month, and in business houses $4 per month, or something like that. He also specified that the city should receive 2 per cent of the net earnings of the company. He was to commence soon, but no date was set. He kept nothing back, and his proposition appeared feasible and business-like, and the franchise was granted. Now, Mr. Brookes and his associates, however, did nothing toward putting up their new plant. I saw him a short time ago, and he said that when the council passed the ordinance cutting down the schedule of charges of the Sunset Telephone Company they concluded that it would be unsafe to do anything for the time being; that the Sunset company would undoubtedly meet the cut, and that the subscribers throughout the city would keep the phones they have in preference to putting in those of a new company. So that is where the matter rests.'

Manager Armstrong, of the Sunset Telephone Company, when seen yesterday regarding the new company, said: 'I don't believe that the new Standard Company is backed by the people and the capital that has been reported in the newspapers. It is said the company has a total backing of $100,000, but I don't believe it. They would like to have the Bell patents, but they haven't them, and won't be very likely to get them. Mention is made of their own patents, which they claim are better than those of the Bell company, but if the new patent amounted to much I think we would have heard of it before this. Mr. Piles says that the Standard representative stated that the Sunset Telephone Company in good times pulled down $50,000 a year profit out of Seattle. I don't see how the company could do that when the total revenues do not reach that sum.'

Attorney Lehman, of Tacoma, is now in the city, and it is said he will soon apply for a telephone franchise, quoting $3 per month for business houses and $2 for dwellings. But every subscriber must sign an agreement to keep the phones for five years, and also subscribe for a $10 bond, paid in four quarterly installments of $2.50 each. Then the price of the phones will be reduced to $3 for business houses and $2 for dwellings; but if the subscriber ceases to use the phone before the expiration of the five years, he forfeits the $10 bond.